Valero Idles Nebraska, Indiana Ethanol Mills on Poor Margins

Valero Idles Nebraska, Indiana Ethanol Mills on Poor Margins

 

Valero Idles Nebraska, Indiana Ethanol Mills on Poor MarginsValero Energy Corp. (VLO), the third- biggest U.S. ethanol producer, idled its distilleries in Albion, Nebraska, and Linden, Indiana, until it’s profitable for the plants to produce the fuel.

The mills each have capacity to produce 120 million gallons of the fuel, annually, and were shut earlier this year because of the poor margins before San Antonio-based Valero restarted them in September.

“They’ll restart once margins improve to a point where it’s economically feasible to run them,” Bill Day, a company spokesman in San Antonio, said in an e-mail.

Corn is the main ingredient for the alternative fuel in the U.S., with one bushel distilling into at least 2.75 gallons of ethanol. The worst U.S. drought in 56 years scorched crops for the grain and has boosted prices 15 percent this year.

Denatured ethanol for November delivery advanced 2.8 cents, or, 1.2 percent, to settle at $2.413 a gallon today on the Chicago Board of Trade. Futures have gained 9.5 percent this year.

Bunge-Ergon Vicksburg LLC plans to idle its Mississippi ethanol distillery by Nov. 30 because of high corn prices. Abengoa SA (ABG) shut its plant in Madison, Illinois, this month and Biofuel Energy Corp. (BIOF) said last month that it closed its mill in Fairmont, Minnesota.

Ethanol production in the U.S. has fallen 17 percent this year to 801,000 barrels a day in the week ended Oct. 19, Energy Department data shows.

Three of Valero’s ethanol plants are operating at reduced rates until margins improve, Gene Edwards, Valero’s chief development officer said on a conference call today with analysts and investors.

Bloomberg

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